Market Power

Oh, The Ambiguity!

Today is Alan Greenspan's last day on the job.  On this day, I am reminded of a former professor's comment about Alan Greenspan's penchant for ambiguity:

"Wouldn't it be great to hear Alan Greenspan respond to the common student query 'What will the test cover?'"

RIP: Coretta Scott King

From Yahoo! news:

Coretta Scott King, who turned a life shattered by her husband's assassination into one devoted to enshrining his legacy of human rights and equality, has died. She was 78.

Markel Hutchins, a close family friend of the Kings, told The Associated Press he spoke early this morning with Bernice King, who confirmed her mother's passing.

On Vioxx

Many readers are well aware of the situation regarding pharmaceutical giant Merck's problems with their anti-inflammatory medicine Vioxx.  The company pulled the drug off the market as questions regarding the link between Vioxx and heart disease became widely disseminated.  This voluntary ban on the sale of the medicine, of course, was in part due to political as well as legal fears held by Merck officials.

Researchers who wrote a study published by the New England Journal of Medicine were reported to have kept three heart attack patients out of the sample.  Had these three patients been included in the study, its results would have been less-favorable to Merck.  What initially seemed to be damning evidence of a company putting profits before people has gotten a lot more complicated than that.

From a January 16th editorial in the Wall Street Journal (free copy available here):

Any journal has an obligation to demand honest studies. Yet the facts of this case suggest that is exactly what it got. In November 2000 the journal published a Vioxx study funded by Merck, which was ostensibly looking for gastrointestinal problems. In the course of the study, the researchers also discovered that participants showed a somewhat higher risk of heart attack from taking Vioxx as compared to another widely used painkiller, naxopren -- a fact they included in the published results.

What has Dr. Curfman in a dither is the fact that three more participants also suffered heart attacks -- though only after the cutoff date that had been determined by an outside safety panel for the study. The three heart incidents were included in an early draft of the paper, but they had disappeared by the time it went to press. The not-so-subtle accusation is that Merck manipulated the data.

In fact, as prominent scientists have since attested, the authors were simply following the rules of science. "If the outcomes truly occurred after the close of the study, then they don't belong in the study," Brian Strom, an epidemiologist at the University of Pennsylvania, told Nature magazine. As to a grand Merck cover-up, the company provided the additional information to the Food and Drug Administration, publicly released it not long after the journal's article, and included information about the additional heart attacks when it sent out marketing materials that included the published study.

The Need for a New Hotel?

A recent article in the local paper describes "sniping" going between the local city council and the owner of a downtown hotel.  Members of the city council want a new downtown hotel (and are willing to subsidize it) to help bring conventions to town and the owner of the existing hotel isn't happy.  The hotel owner accuses city council members of playing favorites.  City council members counter with, effectively (and, of course, paraphrasing), "shut up... you got more public assistance."

While this provides some type of marginal eye-rolling amusement, there's an important passage in the article that deserves a small bit of comment.  In this previous post, I quote a passage in a previous article where a council member states that Mankato "needs" a new hotel.  However, from the first article linked above,

He noted that the Holiday Inn has a downtown monopoly, and he added that he would have liked to see Anderson bidding on the new hotel, rather than trying to tear the revised deal down.

“Is it the best deal ever? Maybe, maybe not,” he says, but it’s the best deal in the many years — he estimated between 15 and 30 — that the city has been trying to build a downtown hotel.

Government officials have been trying for 15-30 years to bring in a new hotel downtown and have been unsuccessful?  That should say something about the "need" for a new hotel downtown, especially with the notion that the other hotel has a downtown monopoly. 

I realize that convention goers like to be near the convention center, but the Mankato area isn't all that large.  Roughly speaking, the little twin cities (Mankato and North Mankato) run about 7 miles from east to west and about 5 miles north to south.  Downtown Mankato, the epicenter of the sniping activity, is right in the middle of the area.  A brief look at the local phone book shows that there are 12 other hotels in the little twin cities and 1 bed and breakfast (about a mile or slightly less from the Civic Center).  Perhaps the supposed monopoly isn't all that monpolistic and the market isn't all the government officials want it to be.

Here is another previous post on the hotel debate.

Super Bowl Economics

My latest post is up over at the Sports Economist where I post quotes from a Who's Who of sports economists.  Be sure you read the comments.

Update: The more I think about it, the more I agree with King and Craig Depken that this will be the "largest economic impact Super Bowl" in a long time.  But I still have doubts that the benefits will outweigh the costs and that this Super Bowl will create much long-term investment in Detroit.  But I am also willing to be wrong :-) .

Respect for the Game

I have tremendous respect for the games I play.  In softball, whether my team's up by 15, down by 15, or tied, I always give 110% (which is about 10% of what I used to be able to give, say, 10 years ago).  I also expect games to be called by the rules... but there are exceptions.  One exception is when a coach passes out during a basketball game and is called for a technical:

Penders fell face first onto the court after watching the Coogs' leading scorer, Oliver Lafayette, get whistled for a foul as UAB's Wen Mukubu drove to the basket late in the first half. Apparently believing that Penders was reacting to his disbelief with the foul call, an official issued a technical foul on Penders. Penders, who has a defibrillator in his chest as the result of a congenital heart defect, collapsed as a result of that heart condition and a bout with dehydration, Houston officials told the USA Today.  However, even after Penders was wheeled out off of the court by medical personnel, the officials refused to rescind the technical foul assessed to him, apparently alleging either that he should have more appropriately collapsed away from the field of play or that they were not impressed by the lengths to which Penders was taking his theatrical play. Penders did return to coach the second half of the game without further incident, but the Cougars lost the game by three points (UAB made both technical free throws).

Out of respect for the health of Coach Penders, the referees should have reversed the call and Scott at Sports Law Blog notes that CUSA officials have publicly criticized the officials.  One of the commenters to the Sports Law Blog post also suggests that the opposing coach could have told his player to intentionally miss the free throws.  I'm not so sure if that would have been good because, after all, coaches aren't paid to be good sports.  I didn't see the game or the incident, so I don't know what was going on at the time, but Coach Pender's Houston squad lost by only 3 points to UAB.  Would the UAB fan base have rabidly gone after opposing coach had UAB lost by 1 point (both technical shots were made)?

Scalping Luxury Boxes

Don't tell the IRS:

Bobby Bains, a Victoria, B.C., major-accounts representative for a cable company, has set his limit at about $1,500 per ticket. He based that on what he could afford, after budgeting another $1,500 for a weekend trip to Detroit.

A fan since 1982, Bains said a chance to sit on a 19-inch piece of hard plastic is worth $3,000.

"I've never been to a Super Bowl," he said. "Seattle's never made it to a Super Bowl."

The corporate world is a different story. There are 132 suites at Ford Field, ranging considerably in size and price.

TicketsNow.com, which connects ticket buyers and sellers, advertised Monday a 40-person luxury suite on the 40-yard-line for — are you sitting? — $261,000. Another Web site priced a box at $315,000. The median home price in the Detroit area last year was about $169,000.

Hoo-aahhh!

By the way, it is illegal to sell tickets above face value in Michigan.  From that comes a familiar question to many:  how does that law work in the face of the internet and, more to the point, with luxury boxes?

HT to co-blogger Skip at The Sports Economist and MR.

Water, Water

Doc Palmer writes:

Water is a necessity, right?

And so its price must be kept low, right?

Not necessarily.

One of the problems of modern life is the misunderstanding it means to have a "right" to have access to things necessary for life.  The misunderstanding comes from the thinking of the "right" to have access to something as being equivalent to the "right" to have it at a constant cost or, worse, at no charge.  Doc quotes from a DOL post:

Five years ago in Cochabamba, Bolivia, the New York Times reports, local leftists ran an American monopoly franchise (Bechtel) out of town for trying to raise water rates. A victory for the people!

One small catch: today, because the local public utility has kept the old low rates, they can’t cover the cost of keeping the pipes filled, let alone extending them. Half the population still has no piped water service (they rely on wells and freelance water trucks), while even for the lucky households the taps run only a few hours of the day. Maybe not such a victory for all of the people.

Like health care, clean water is something that takes resources to produce - resources that, of course, have alternative uses.  Normally we don't think much about having enough water to drink here in the States, but during droughts, public water utilities often find their resources strained under high demand.  Instead of raising prices, which forces consumers to alter the choices they make about water usage and, thus, makes more water available for drinking, the utilities ask for voluntary water restrictions.  But such requests for altruism only go so far.

To see some evidence of what can happen when privatization of water provision is allowed, read this.

Global Warming

While we here in southern Minnesota keeps tabs on another warm winter, let's remind ourselves that other places on this earth are pretty dadgummed cold right now.

The former Soviet republic of Georgia was among the most heavily affected areas of Europe, suffering not only temperatures as low as 22 below but also struggling with inadequate gas supplies after explosions blamed on sabotage cut off shipments of Russian gas early Sunday. Georgia scrambled for alternative supplies from neighboring Azerbaijan, which began reaching the country late Sunday, but service remained spotty Monday.

Moscow’s health directorate said 27 people had frozen to death in the capital since the cold wave hit last week. The Health Ministry could not be reached for a nationwide tally of cold deaths, but figures compiled from news reports show at least 53 people dying because of the cold.

What a Horrible Place to Work

The Anti Wal-Mart crowd's gots some 'splainin' to do, Lucy!

Tomorrow (Thursday), Wal-Mart will announce that its new Evergreen Park, IL store received more than 25,000 applications for 325 positions – a majority of which are full-time. That’s a 1.3% acceptance rate. [courtesy of Marshall Manson]

I sure am glad academic journals don't have such low acceptance rates.